REVEALED: How trying to make personal indebtedness the saviour of neoliberalism is letting in the Hard Left of socialism

ALREADY DEBT-STRAPPED BRITS ARE BORROWING MORE

Lending to individuals in the UK is estimated to have risen by £200m during September over August. Some may see this as improved credit liquidity and therefore good news. I don’t.

People go on holiday in July/August and spend money they don’t have. On returning, they seek credit to max out the already maxed….because in the age of can-kicking, that is the only alternative between them and insolvency.

Some simple facts about personal debt in Britain:

  • Citizens Advice said people aged 17 to 24 asked for help on 102,296 debt issues in the last year, a 21% rise on the previous year.
  • The average household credit card debt is £2,293. Think about that for a minute…in the context of 23m households in the UK
  • Since 2013, there has been a striking increase in unsecured lending. This covers pretty well everything except mortgages: borrowing on credit cards, store cards; financing for cars; and, increasingly, payday loans. The Bank of England says this unsecured lending is now rising at the fastest rate in ten years.

The only thing keeping the neoliberal monopolism show on the road is lax money – allowing corporations to stick it on the bottom line, and consumers to stick spending on the credit card.

But the idiotic cynicism of such denialist economics is allowing a simplistic Left wing road show to gather both speed and followers: by selling gullible sufferers the idea that it is capitalism as an economic system per se cooking up this inevitable Day of Reckoning…and thus capitalism as an idea must be root and branch destroyed.

But that is Leftist opportunism trying to suggest that the crap going down today is capitalism.

The transformation of formerly Centre-Right politics into Rabid Rightism is turning more and more people on the Centre-Left towards Looney Leftism. The extreme ideology of Globalist Corporatocracy is driving the dispossessed towards the fascism of Stalinist Autocracy.

It is a surreal irony…but no less true for all that. In the context of stereophonic ideological politics, the common sense policy aimed at improving life for the common People doesn’t stand a chance.

Earlier at The Slog: Is Santander built on sand?

48 thoughts on “REVEALED: How trying to make personal indebtedness the saviour of neoliberalism is letting in the Hard Left of socialism

  1. If only the masses realised that the best things in life are free – so it’s their retarded choice. Once bitten, they’ll be twice shy.

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  2. Credit expansion = increased GDP = Bullish!

    As long as consumers can increase the number of credit cards they hold, they can meet the minimum monthly payment requirements of older card accounts. The perfect model of EU/ECB kick-the-can Extend and Pretend financing.

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  3. Pingback: REVEALED: How trying to make personal indebtedness the saviour of neoliberalism is letting in the Hard Left of socialism | The Slog. | sdbast

  4. The whole world especially the west has too much debt and we are going to see some defaults in Europe soon with out a doubt. I became debtless back in 2012 and have stayed that way ever since. If the bond bubble bursts which is looking very likely as it seems the flight to quality has already started, we will see interest rise very quickly and you may see liquidity dry up over night.

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  5. Absolutely true and usually ignored, but ANY alternative approach, however ‘common sense’ is now trashed as ‘Looney Left’. As for Ricoh’s ‘retarded’ descriptor for people who are locked into a can kicking credit trap just to maintain a basic standard of living-‘misled’ would be more accurate. TPB set glamorous and sophisticated traps, and then Ricoh is blaming us for falling into them. If everyone in that situation becomes ‘twice shy’ then already shrinking levels of consumption will shrink further, and the consumer led recovery will recede towards an already dim horizon.

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  6. The problem is not Capitalism, it is our monetary system. The private banks have a near monopoly of the issuance of money as credit . This money is issued as debt with interest .
    The private bank have failed in their duty to invest in the growth of the Economy to create real wealth. The only growth has been in the debt based credit supply for short term profits.
    Until there is wealth creation ,kick started by investment in wealth creating Industry we will not recover from this downward slope to poverty, penury and bankruptcy.
    Lack of Industrial investment has resulted in high unemployment, low wages and less spare money to spend. We have stagnation
    People have resorted to pay day lenders and credit cards to supplement their low pay on a temporary basis. This has spiralled out of control for many and they have gone deeper in debt.
    I do not expect the private banking system to ever have a concern for the welfare of the economy. This is the duty of the Govt. That is why we require OVERT MONETARY FINANCING , incorrectly called Peoples QE to regenerate our Industrial base and create Real wealth and employment.
    This is not Hard Left Theology, it is called Modern Monetary Theory. Where the Govt via the Treasury takes back its Sovereign right to be the sole issuer of the currency of the State. And use it for the benefit of the citizen by investing in the growth of the Economy for everyones benefit.

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  7. If your economy is dependant on spinning financial plates rather than manufacturing and extracting natural resources your trajectory will continue to be downward. If the economy is shrinking due to world trade and crony capitalism, the answer is not further dividing a dwindling piece of the economic pie through socialism. Buying local and supporting small business is a everyday practical way to grow the economy. I like the idea you have in GB of currency issued by a local area. I think that this is a way to take positive steps without confiscating others property.

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  8. Sorry, Ricoh, they won’t. They’ll be saying ‘it wasn’t my fault and I want some compensation’. It’s why I stopped being an IFA 5 years ago, shut the company down and shut off any FSA regulatory comebacks.

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  9. OVERT MONETARY FINANCING or ‘Helicopter Money’ Policies – Lord Turner is waking up?

    https://moneyasdebt.wordpress.com/2013/02/14/overt-monetary-financing-or-helicopter-money-policies-adair-turner-is-waking-up/

    Overt Monetary Financing (OMF) and Crisis Management

    http://www.project-syndicate.org/blog/overt-monetary-financing–omf–and-crisis-management#VIpuVmHUksdxK4bl.99

    I suppose Overt Monetary Finance is just another version of Smoke and Mirrors. I would think a simplistic idea is to
    a] if one has paid more to a Bank/Finance Company then twice the original sum borrowed. Then that is the debt cancelled and there is no need to make any further payments.
    b] Apply the same principle to State/Company loans and finally
    c] Abolish tax relief on any interest paid on the original loan. It only encourages more borrowing subsidised by the tax-paying majority.

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  10. There is one issue that has been missed, and that is why UK households simply can’t make ends meet. It was the case for my family when we lived in the UK; making ends meet was a huge struggle. One that we eventually lost.

    So what is it about Europe that means many families can exist on the wages they earn? It isn’t the case across all of Europe, but certainly across the North – the so-called Nord-Euro zone of social-democratic governments, workers have a lifestyle that whilst modest, is sufficient to their needs. And they get their six weeks paid holidays on top. What they don’t have to do is to do two jobs or where they have no option but to work on the black because otherwise they’d not have enough.

    Why is it that Britain is so far behind in social conditions? One part of this is a government that has pandered to its more powerful masters, and scorched regulations that apply to the working person. There are other reasons, but they all point to a Brit being better off living in Europe than in Britain.

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  11. What you have described above in NOT modern monetary theory. Not even close. Positive money is very different to MMT and is based on a limited understanding as to how everything ties together.

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  12. Yes Phil
    As and when Beijing realises all it has to do is raise rates to collapse the whole thing, there will be much unpleasantness at the Globalists’ Club.
    It’s the best club in the world: cheap to join and free thereafter…yet somehow, 97% of the membership wind up bankrupt, and the Committee becomes unfeasibly rich…and thus able to offer the same philanthropic deal to new members.

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  13. A gem from Gemma.
    Here in France, clean and subsidised transport, bread, medication, cheap wine/beer and restaurant food, minute local taxes and neighbours who cooperate means I can live very comfortably on circa €23,000 per annum. There is no way one could live on that in the UK.
    Britain is ‘so far behind’ in social conditions because it slavishly copies the US model in everything…where they too are maxed out on debt.
    You couldn’t make it up: but they can… and they do.

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  14. It was the failure of the mortgage market,specifically the number of people who were unalbe to service the debt, that started the whoel 2008 meltdown. Mortgages only became “toxic” when they were likely to be defaulted. The same is happening now, but with a much higher level of unsecured debt thrown in the mix. before the 2015 election all the economic projections fo rhte Osborne targets were shown to be achoevable only with the massive transfer of debt fro the govt to the people, as individuals. Elderly need care? Children need education? Want a degree? All this is piling up unpayable debt. The Labour policy on student fees is largely based on the pragmatic view that more than half will never repay the student loans they hold, and the finances of the entire sector will be unsustainable if this happens. Multiply that across all such activities, and you will see that the next meltdown is just around the corner. Being debt-free may be a good strategy.

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  15. I was just wondering. We have not heard a dicky bird from Garry, who abolished the economic cycle, for some while,since his retreat to SNP Scotland. FWIW, £35k is my annual charge for wine, pool, sunshine and INSURANCE, here on the South Downs!

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  16. That experience in the UK – bringing up a family without enough money – was my medication.

    I learned a lot. Only what I learned wasn’t positive. It’s not so much that the UK slavishly follows the US, but to my mind, both countries put their own profits before their economy. Both the US and UK are more concerned with their economic figures than the businesses that produce them. In this respect they’ve put the cart before the horse, and carts do not need regulating in the way horses do (if you follow me).

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  17. Wherever there is fraud, there is complexity. Economics isn’t hard to understand, but its very simplicity takes some getting your head around.

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  18. We in the UK never had the working tax burden that the europeans still suffer – nor the regulation.
    We live in a clean unpopulated part of the uk -and work two days a week, tax free. The increased tax thresholds were the key to my freedom. I can live on £10,000 very comfortably. My partner does the same, and we are very well off. Retirement in europe is one thing, but the workers below professional white collar are prisoners of the state. Undisputable fact, and that’s why they come to the uk.

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  19. Ricoh, I can see the advantage for a skilled entrepreneurial person such as yourself – but one has to reckon with the fact that not all people are as imaginative.

    Nor can an economy hope to survive on the industry of independent entrepreneurs alone, and it is here that your ideas meet a harsher reality. As I say, it’s fine for imaginative entrepreneurs to make good – but an economy in the world we have needs the kind of productive industrial base that Europe still has. That and the regulation and cultural ethos that keeps it there, rather than in China.

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  20. Why is the British economy dependent on spinning plates? It is the end result of an economic model that sees the economic figures as being more important than the businesses that produce such figures. After all, if one can produce the figures by spinning plates and playing the stockmarkets, why bother with getting your hands dirty and whipping expensive and argumentative operatives into line???

    For the Brit it’s a done deal.

    The problem since the 1890s is that the German social-democratic economic model has fitted the British ideals better.

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  21. @BC

    Before ‘socialism’ (whatever your definition of that is) is tried to further divide the economic pie, I would like to see government efforts to get back the enormous pie mountain that has been stockpiled away in tax havens by individuals who object to anyone but them having a sniff of the pie that we collectively produce as a society. Such corporations and ‘high worth’ individuals are pushing up government pie confiscation from the crumbs that remain on everyone else. (It’s mainly the upper crust who should be targeted.)

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  22. If it’s an ism then it will be corrupted and eventually fail. Socialism is barely an ism at all. As formulated and practiced for 80 years or so It’s just an appendage nailed onto capitalism. Now Communism is a real ism and it’s hallmark in practice was a decent into corruption at the speed of light. It has taken capitalism a lot longer to be totally debased.

    How socialism is supposed to work without capitalism, or whatever the hell we have now going on under that name, escapes me. Redistribute wealth? What wealth, after you strip away inflated asset prices.

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  23. No need to increase the number of credit cards – as long as the repayments can be met there is no problem. If, however, security of income is threatened then consumption will stop. More and more people will start to feel this if the money-men don’t sort their shit out.

    I would hazard a guess that most sales of ANYTHING are made at discount prices, if prices rise or the cost of money increases then we have a problem.

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  24. @ Gemma
    well in fact we both work during the term time at the local university (Coventry). I tutor Career guidance and my partner works in the accounts department. We enjoy stress free work environment with meals provided and pension contributions. We feel that we make a valuable contribution to the students’ future which will in turn support the long term economy.

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  25. “If only the masses realised that the best things in life are free ”

    Well we have been living over a year on waste free food from my grocer and have never ever been so healthy. Loads of fresh-ish fruit and veg, yeah you need olive oil from the supermarket as also dairy stuff like milk and yoghurt but the rest costs nothing. yesterday was a delish kohl rabi blanched in a cream/prosciutto/parmesan sauce kind of carbonara if you will. Main ingredient free.

    The amount of food the Germans waste is almost criminal.

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  26. I second John’s points. We too live in France and, except for the low local taxes, I agree. Our local taxes are high because successive mayors have spent a large proportion on maintaining the local infrastructure and environment and in providing excellent support to both the young and elderly. I have no problem with this approach.
    One thing which heavily affects the situation is the question of housing. Prices in the UK are obscenely high and, because of the shortage of reasonable priced rented accommodation youngsters are forced on to “Housing ladder” at an age where they can barely afford the mortgage even at today’s low rates (I remember paying 15% in the late 80’s. If rates start to rise it will have a catastrophic affect.

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  27. Having escaped to Catalunya many years ago, and just spent 2 weeks travelling across France, I found prices there relatively more expensive. Here a wonderful menu de dia for as little as 9 euros, including all the wine you wish to consume, rather than just a tiny miserable glass, or having to pay extra, as in France. Coffee, beer half the prices charged in France. Poll tax less than 100euros p.a.l If you are fortunate enough to live within reasonable travelling distance to Andorra, petrol for 80cents a litre and fags and booze at amazing prices!

    Like you John, I could never afford to go back to Britland; – I have only a modest income but enjoy a wonderful lifestyle, beautiful mountain scenery and a huge plot of land to cherish.

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  28. a great article and comments that are enjoyable to read. and it seems to me that ‘left and right’ ‘capital or social’ are the two arms or legs that we need to coordinate to progress. rust rots all endeavours faster and faster. so maybe steel that won’t rust becomes attractive. like personal integrity. principle that one is prepared to stand by. a rare flower amongst politicians today.

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  29. Lupulco it is good to know that they are waking up,but if the patient is already dead it a bit late! All monetary policies need to be targeted to where monetary policy has been weakened ie wages,price of commodities, such has wood,coffee(that has resulted in weak economies worldwide) etc the values should then be re-valued within the amount of money in the system & tax PAID & increased where it has been low & lowered where it has been punitive,this would simply re-evaluate all previous bad trades to more equal,whilst the increase in monetary supply would be permanent because of the other measures mentioned it would not be a adverse permanence but would reflect what should have happened,lobbying should be made illegal & politicians paid £1 for every vote & in future money creation should be circulated evenly into the economy to keep all sides of the equation equal

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  30. One of my post seems to be missing,I have always maintained that Neoliberal economics breeds socialism & destroying socialism which it is trying to do falls into it hands also because of the loss of integrity of the MSM any new idea is going to struggle against socialism from getting of the ground!

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  31. @ Ricoh … it may be as well to plan your future in the near term on the basis that the Public Teat may be withdrawn quite suddenly. I do not dispute that you may indeed be adding to the sum total of human experience and that your students benefit from your tutorials; however, this will be ignored totally when (not if) the bean-counters cast their beady gaze on your meagre stipend.

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  32. Shortage of housing driving up price in both rental and owner-occupier and cheap labour imported from the EU are two things that cause huge hardship to working people. I’d wager that most of those millions of jobs created since 2008 are paying a lot less than £20k pa. With average earnings so low young ‘uns are hamstrung from the start;students debts to pay off, housing to pay for, commuting costs eye-wateringly high oh and then they are required to save for a pension – credit card spending isn’t and indulgence in luxuries its probably funding the necessities – council tax? gas and electricity? food? Kicking the can down the road in the two weeks they have to exist until payday is the easiest option. In this context one might be able to understand how the looney left seem an attractive alternative.

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  33. caratacus
    on the face of it….yes. Reality is that the beanc ounters would dispense more money per annum supporting us with the range of benefits that we are entitled to…..so what we are doing is livng the perfect model of public sector employment.

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  34. Pingback: Plotz | Gabriel Vents

  35. The trouble is that ‘GDP’ is a simplistic measure and a delusional one (liked by politicians). The person that invented GDP warned against its use as a measure of national wellbeing. We include financial and what are ‘negative’ transactions in GDP. Given this the creation of a mortgage is capture in GDP when it actually creates nothing of value. No goods are produced and traded. GDP hides the fact that the economy is being hollowed out – a soufflé economy based on debt and non-value creating financial services. All ready to deflate. A Seneca Cliff collapse.

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  36. I guess the thing about the US model is that it attempts to create markets where they don’t make any sense. These are created to funnel public monies to business interests. The outcome is increased ‘complexity’ which translates as higher costs to the community as a whole as the ‘commons’ and ‘public goods’ are destroyed. For instance treating housing as a speculative chip in a casino has imposed massive debt (cost) on society which feeds through as higher product costs, increased wage demands, higher retail costs, etc.

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